Economics Dictionary of ArgumentsHome
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Ludwig Lachmann on Institutions - Dictionary of Arguments
Parisi I 273 Institutions/information/knowledge/Lachmann: Given static and dynamic knowledge problems, legal institutions are important in the coordination of different individuals at a point in time, and over a period of time. Before we can understand how property and contract law facilitate solving knowledge problems, we must understand the importance of avoiding endogenous uncertainty produced by the law itself. Lachmann argues that incremental changes of rules, especially in their application to particular new conflicts, must not change the predictable nature of legal rules. “If institutions are to serve us as firm points of orientation their position in the social firmament must be fixed. Signposts must not be shifted” (Lachmann, 1971(1), p. 50). >Information/economic theories, >Information economics, >Knowledge/economic theories. Hayek: However, this does not mean that a specific legal rule cannot or should not change. It just means that the system of rules must be predictable. Lachmann’s unchanging signposts are about the stability of the system, rather than the stability of each particular rule. This echoes Hayek’s argument that laws “are intended to be merely instrumental in the pursuit of people’s various individual ends…. They could almost be described as a kind of instrument of production, helping people to predict the behavior of those with whom they must collaborate, rather than as efforts toward the satisfaction of particular needs” (Hayek, 1944(2), pp. 72–73). Simon: To maintain the stability of the system at the same time that rules can adjust marginally to new economic circumstances requires the “decomposability” of the system of rules (Simon, 1969)(3). 1. Lachmann, L. M. (1971). The Legacy of Max Weber. Berkeley: The Glendessary Press. 2. Hayek, F. A. (1944) The Road to Serfdom. Chicago: University of Chicago Press. 3. Simon, H. A. (1969). The sciences of the artificial. Cambridge, MA MIT Press. Rajagopalan, Shruti and Mario J. Rizzo “Austrian Perspectives on Law and Economics.” In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Lachmann, Ludwig Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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